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Monday, January 17, 2011

M’sia-S’pore deal leads to property openings

The station site at Tanjong Pagar has the greatest redevelopment potential

PETALING JAYA: The recent historic agreement between Malaysia and Singapore to settle the long-standing railway land issue which runs through Singapore to Malaysia will open up property development opportunities in Singapore and Iskandar Malaysia not envisaged before, a property consultant said.

According to DTZ Research in its latest report, the warmer bilateral relations, and smoother and cheaper transport system arising from the agreement will give a boost across all property sectors in Iskandar Malaysia.

“With a proposed mass rapid transit (MRT) line linking Johor Baru city centre to Nusajaya, there will be a tendency for a shift in value towards Nusajaya as more newer physical developments take place and the cost of using the Second Link becomes more competitive,” the report added.

For Singapore, judicious land allocation has always been an integral part of real estate planning and development given its limited land size. The reversion of the railway land will thus enable the authorities to amalgamate the track land with adjacent sites and bring about more optimal use of the land.

Brian Koh says the railway agreement has unfolded a new chapter for Malaysia and Singapore.

DTZ Malaysia executive director Brian Koh said the railway agreement had unfolded a new chapter for Malaysia and Singapore and both countries can co-build a new growth story that resembles the Hong Kong-Shenzhen Metropolis model.

However, unlike Hong Kong and Shenzhen which are both under one country, a lot more co-operation and government involvement is needed between Singapore and Malaysia to overcome two distinct economic and legal systems and build trust and co-operation, while pursuing their respective national and economic objectives.

“The degree of success of Iskandar Malaysia will be partially determined by political co-operation with neighbouring Singapore as well as by economic factors,” Koh said.

More skilled and semi-skilled migrants from other parts of Malaysia may be attracted to reside in Iskandar Malaysia to take advantage of the employment opportunities in Singapore through daily commute without having to pay for the high residential cost of living across the causeway.

“Demand for homes from foreign buyers, particularly Singaporeans, is envisaged to improve due to the higher confidence level in Iskandar Malaysia from the warming bilateral ties,” he added.

In the office sector, there is potential for a shift of low-end commercial service activities, namely back office processes, from Singapore into the Johor Baru central business district to take advantage of cost arbitration, given the widespread use of the English language and the general availability of mid-level executives in Johor.

The retail and hotel sectors will also benefit from the higher tourist flow into Johor, while more industrial and logistics investments can also be expected from Singapore.

DTZ head of South-East Asia Research Chua Chor Hoon said that among the returned railway land in Singapore, the railway station site at Tanjong Pagar had the greatest redevelopment potential given its size and the government's plans for this district.

While the rest of the returned land are unlikely to be developed anytime soon, one area that is likely to see some earlier new developments will be at Bukit Panjang where a MRT station would be ready in 2015, providing some impetus to develop the vacant land around it.

The once sleepy Tanjong Pagar area is perking up with newly completed and pipeline offices, hotels and apartments. Higher rents and prices are being achieved and more investors are becoming interested in the area.

“The Spottiswoode area just north of the railway station may be totally rejuvenated as the old existing residential developments are prime candidates for redevelopment,” Chua said.

By The Star

SP Setia wins Penang convention centre deal

SP Setia Bhd, the country's largest developer by sales has won a RM300 million project to build and operate the Penang International Convention and Exhibition Centre (sPICE), Bloomberg reported, citing an email statement from the Penang Chief Minister Lim Guan Eng.

Last Thursday, Business Times reported that the property developer was the front runner and on the verge of winning the job.

Securing the project should bode well for SP Setia, which posted sales of RM1.74 billion and a net profit of RM251.81 million in the year ended October 31 2010.

The project aims to create a "Penang People's Park" that includes the country's first subterranean sPICE, a 2.83 hectares public park on the rooftop, a refurbished and upgraded Penang International Sports Arena (Pisa), a refurbished and upgraded Aquatic Centre and a four-star hotel with retail outlets and a spacious parking lot.

The project will be developed through a public-private partnership agreement between the Penang Municipal Council (MPPP) and developer SP Setia Bhd's unit Eco Meridean Sdn Bhd.
On September 3 2010, SP Setia had bought 2 ordinary shares of RM1.00 each in Eco Meridian Sdn Bhd, resulting in the private company becoming a wholly owned unit of SP Setia.

Financing for the Penang project will see MPPP injecting some RM50 million, through a combination of land and cash, while Eco Meridean will finance the rest.

The proposed sPICE, which initially came with a RM50 million priceline, has been mired in controversy ever since Lim proposed it.

One of the concerns raised was that the project would incur huge expenditure, which could result in the council becoming insolvent.

Lim, however, claimed the council could save some RM25 million from the refurbishment, repairs and upgrading work on Pisa and the Aquatic Centre and that Eco Meridean will pay RM13.5 million for land to build a four-star hotel to complement sPICE.

This means that the net sum of MPPP's investment in the project would be RM11.5 million.

Work on the project is expected to start within three to six months' time and will be completed in three years.

By Business Times

SP Setia: New MoH complex design ready

KUALA LUMPUR: SP SETIA BHD has finalised the design and costing for the proposed development of a new integrated health and research complex for the Ministry of Health (MoH) in Setia Alam, Selangor.

The company said on Monday, Jan 17 that its associate Sentosa Jitra Sdn Bhd (SJSB) had finalised its design and costing for the new complex based on the MoH’s brief of requirements.

It added SJSB is now ready to commence negotiations with the Public Private Partnership Unit in the Prime Minister’s Department (Unit Kerjasama Awam Swasta) and the MoH “based on the proposal submitted to the government”.

SP Setia said a UKAS had issued a letter on Sept 24, 2010 informing it about the approval-in-principle granted by the government to SJSB to enter into negotiations with UKAS and the MoH over terms for the proposed complex to be located on approximately 55.33 acres of land at Setia Alam via a land swap for the government land measuring 40.22 acres along Jalan Bangsar, Kuala Lumpur (“Proposal”).

It said the government’s approval-in-principle to SJSB’s proposal, subject to terms and conditions to be agreed. It added SJSB has finalided its design and costing for the new complex.

SP Setia said the proposal would enables the MoH to reap the value of matured government land to obtain a fully integrated and modern new 1NIH Complex capable of housing all the relevant national health and research institutes and support functions in a single location within the vibrant, fast-growing and highly accessible township of Setia Alam.

“The MoH/government will also have the opportunity to participate in the redevelopment of the MOH Land through its share of 20% of the net profits from the development,” it said.

In terms of benefits, SP Setia said SJSB had started the master plan to redevelop the MoH Land.

“Its superb location provides a rare opportunity for S P Setia to further showcase its skills in developing luxury residential and integrated commercial products within the affluent Bangsar and Federal Hill areas,” it said.

By The EDGE Malaysia

MRT may cost over RM36.6bil

PETALING JAYA: The cost of building the mass rapid transit (MRT) transport system, which is scheduled to begin construction in six months, may swell beyond the projected RM36.6bil as developers and residents have begun lobbying on the proposed locations and types of stations.

Business leaders want the MRT stations to be located close to the centre of commercial activity, in some cases where they have projects or plan to build one, but residents living near or adjacent to the proposed lines have voiced objection against the MRT tracks being built above ground and want the lines and stations to be underground so as to avoid congestion and noise pollution issues.

At the heart of the matter is the alignment of the MRT line, particularly where it should go, where it should stop, and lobbying have begun to have more than 9.5km of the first phase of the 60km Sg Buloh-Kajang line constructed underground.

The entire MRT line is estimated to run a total of 150km at a cost of RM36.6bil. Other lines will be added later. All these lines, together with the existing Star, LRT and Komuter rail will form part of the country's Urban Transport master plan.

At the session with business communities, developers who own shopping malls and commercial developments were lobbying for the line and station to be located at, or as close to their commercial properties as possible.

“We are willing to adopt' a station,” said a source from Uptown's See Hoy Chan Sdn Bhd over the telephone. The company is a different entity from See Hoy Chan Holdings Group which built Bandar Utama and the highly-popular 1 Utama mall. The owners of both companies are cousins.

Uptown's See Hoy Chan is planning to develop the second phase of what is already a densely populated commercial area in Damansara Utama popularly known as Damansara Uptown.

The company plans to build several blocks of offices and serviced apartments on 12 acres. That site is currently being used as a car park.

Damansara Uptown has a working population of about 30,000. Once the 12-acre commercial project is completed, the number will swell by 20,000 to 50,000.

Over in Kuala Lumpur, the Low Yat group is lobbying for the line to be located close to its commercial properties in downtown shopping area Bukit Bintang, in the heart of the Golden Triangle of Kuala Lumpur.

But not all business communities share a common stance. Some fear commuters would use existing parking space at commercial and shopping complexes for using the MRT instead of going shopping.

See Hoy Chan Holdings would like to get in touch with resident associations in the PJ North area to lobby for the line to go underground from Kota Damansara to Bandar Utama station.

“The station can be located below Central Park in Bandar Utama if the line is constructed underground. That location can be turned into a transport hub to serve the vicinity,” said See Hoy Chan Holdings director Datuk Teo Chiang Kok.

“Most of the lines and stations in countries with MRT are located underground. The communities in Kota Damansara, along Persiaran Surian, Bandar Utama and neighbouring residential areas are already there. To build elevated lines over what is already a densely populated area would bring about negative impact on the entire area,” he said.

At the same dialogue, Sunway Damansara resident association representative Ngian Siew Siong appealed to Land Public Transport Commission (LPTC) to have the line go underground in the Kota Damansara area. LPTC is planning for a station to be located at Dataran Sunway, a highly congested area during peak hours. Ngian is also Sunway City Bhd managing director (property development).

Contrary to LPTC's views that the MRT system will boost property values, Ngian said that “the visual impact and the noise level over Persiaran Surian and the vicinity will affect property value there.”

“The MRT line is massive and noisy.”

“The various communities are already in existent. Where will the park and ride facilities be located? Do not look at just the alignment, consider having the line underground and having integrated connectivity,” Ngian said. Under the proposed Sg Buloh-Kajang line, 20% of the 9.5km will be underground.

LPTC CEO Mohd Nur Ismal Kamal said the cost would be five to 10 times higher on a per km basis if the line were to go underground, depending on geological conditions.

See Hoy Chan's Teo Chiang Kok said the area comprised laterite and building an underground line will only cost three to four times more.

Earlier, explaining the Government's rationale to build the system, LPTC general manager Amiruddin Maaris said the MRT would have 50% more carrying capacity than the LRT line and will also be 50% wider. One car train carrying capacity is equivalent to three buses, or that of 177 cars.

“It will ease congestion,” he said.

The MRT system is expected to create 130,000 jobs and bring about a huge multiplier effect from its construction and operation. But the vision to bring out the flavour of KL metropolis, which to many, remains dormant because of the lack of public transport and connectivity, Amiruddin said.

Although tendering is expected to begin in April, the alignment can still be tweaked to accommodate the views of the public.

“This is just the proposed line. We will have other sessions to hear the public's views,” said Mohd Nur.

Said a public transport specialist: “Let us learn from the mistakes of the Light Rail Transit and the Star line.”

By The Star

Axis-REIT sells Port Klang building

Axis Reit Managers Bhd (ARMB) and Axis Real Estate Investment Trust (Axis-Reit) has proposed to dispose Axis North Port LC1 for RM14.5 million to Freight Management (M) Sdn Bhd.

Located in Port Klang, Axis North Port LC1 is an industrial complex comprising a single-storey detached warehouse with a double-storey office annexe, a double-storey amenities building and other ancillary buildings.

ARMB confirmed that OSK Trustees Bhd, the trustee for Axis-Reit, has entered into a sale and purchase agreement for the disposal of Axis North Port LC1.

The proposal is in line with meeting the objective of Axis-Reit, it said in a statement.

By Business Times

Axis REIT to grow 19.6pc in 2011: ECM

ECM Libra expects a 19.6 per cent earnings growth in Axis Real Estate Investment Trust (REIT) Financial Year 11 (FY11) due to contributions from four recently acquired properties.

Axis REIT has completed acquisition of PTP D8 in Johor, Axis Technology Centre in Petaling Jaya, Axis PDI centre in Kuala Langat, Selangor and Tesco Johor as well as its proposal to acquire an office building in Cyberjaya for RM51.3 million which will be completed in the first quarter of this year.

In its research note on Axis REIT, ECM Libra said it expects more acquisitions going forward.

"We understand that the management is working on the acquisition of an office warehouse in Petaling Jaya, a logistics warehouse in Johor and a warehouse/logistics and manufacturing facility in Shah Alam/Klang," ECM Libra said..

ECM Libra is recommending a "BUY" on Axis Real Estate Investment Trust (REIT) with a target price of RM2.90.

"Despite its defensive quality, Axis’ average annual total return of 23 per cent since its listing in 2005 outperforms the equity market as represented by the total return of the benchmark FBMKLCI over the corresponding period," the research house said.

ECM Libra said another plus point is its distribution visibility as Axis commits to distribute 99 per cent of its earnings on quarterly basis.

Axis has the most enviable acquisition track record among M-REITs as it has grown its asset under management (AUM) from five properties with AUM of RM260.4 million to 27 properties with AUM of RM1.4 billion now.

By Bernama

ECM to review 'hold' call on SP Setia

SP Setia Bhd, a Malaysian property developer, had its “hold” stock rating and price estimate under review at ECM Libra Capital Sdn Bhd following a newspaper report of a potential land purchase in Kuala Lumpur.

The Edge weekly newspaper reported on January 15 that SP Setia probably won a bid to purchase a prime land in Bangsar after the company agreed to build a government health institute in Shah Alam, outside of Kuala Lumpur, citing an undisclosed news report in September.

ECM will review the rating and share price estimate of RM5.20 pending the announcement of the said land deal, it said in its research note today.

By Bloomberg